An efﬁciency comparison
of direct and indirect channels
in Taiwan insurance marketing
Chiang Ku Fan and Shu Wen Cheng
Graduate Institute of Finance and Insurance, Shih Chien University,
Taipei, Taiwan, Republic of China
Purpose – The purpose of this paper is to compare the efﬁciency of bancassurance, an indirect
marketing channel formed through the creation of subsidiaries, with an insurer’s own team, a direct
marketing channel, in the Taiwan insurance sector.
Design/methodology/approach – This paper uses the Charnes, Cooper, and Rhodes (CCR) model
to measure the decision-making units’ (DMU) operating efﬁciency.
Findings – The three major ﬁndings are: the efﬁciency score of a direct marketing channel is
signiﬁcantly higher than that of a comparable indirect marketing channel. The efﬁciency relationship
between the indirect marketing channel and the direct marketing channel is independent. A marketing
efﬁciency evaluation, when divided into different marketing channels for evaluation, provides
meaningful results for marketing decision-makers.
Originality/value – By comparing the efﬁciency between two different insurance marketing
channels, managers in life insurance companies can make a more informed choice.
Keywords Direct marketing, Marketing, Insurance, Taiwan
Paper type Research paper
Bancassurance, a method of distributing insurance products, has become a global
trend that is gradually breaking down traditional barriers in how businesses supply
ﬁnancial products and services (Benoist, 2002).
The last 15 years have witnessed many changes in how the ﬁnancial services
industry in Europe, the USA, and Latin America is organized, including the closer
integration of banks and insurers. For example, bancassurance is highly developed in
France where banking networks account for a signiﬁcant proportion of life insurance
sales, although it is taking longer to make inroads into the non-life market (Benoist,
2002). In the UK, traditional barriers between banking and insurance are disappearing
and being replaced by integrated institutions offering a range of services (Morgan,
1994; Salomon, 1990). In the USA, deregulation under the Gramm-Leach-Bliley Act
(GLBA) of 1999 legalized bancassurance and is likely to lead to its geographic spread.
The new law allows the formation of ﬁnancial holding companies that can offer a wide
range of ﬁnancial products, including underwriting, insurance and securities,
commercial and merchant banking, investment in real estate, and other ﬁnancial
activities (Field et al., 2007). Bancassurance is ﬂourishing in Argentina, and in Brazil
large banks play an important role in distributing insurance products. Bancassurance
is a growing sector in Mexico due to the role banks played in the creation of pension
funds following pension reform in 1997. Joint ventures between local and foreign
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